Bid Functions in Auctions and Fair Division Games: Experimental Evidence

Posted: 26 Aug 2003

See all articles by Werner Guth

Werner Guth

Max Planck Institute of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Radosveta Ivanova-Stenzel

Technische Universität Berlin (TU Berlin)

Manfred Königstein

University of Erfurt

Martin Strobel

Maastricht University - Department of Economics; Maastricht University - International Institute of Infonomics

Abstract

In auctions a seller offers a commodity for sale and collects the revenue. In fair division games the object is collectively owned by the group of bidders who equally share the revenue. We run an experiment in which the participants face four types of allocation games (auctions and fair division game under two price rules, first- versus second-price rule). We collect entire bid functions rather than bids for single values and investigate price and efficiency of the different trading institutions. We find that the first-price auction is more efficient than the second-price auction, whereas economic rationality assuming heterogeneous bidders suggests the opposite. Furthermore, we study the structure of individual bid functions.

Suggested Citation

Güth, Werner and Ivanova-Stenzel, Radosveta and Königstein, Manfred and Strobel, Martin, Bid Functions in Auctions and Fair Division Games: Experimental Evidence. German Economic Review, Vol. 3, pp. 461-484, 2002. Available at SSRN: https://ssrn.com/abstract=347140

Werner Güth (Contact Author)

Max Planck Institute of Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Radosveta Ivanova-Stenzel

Technische Universität Berlin (TU Berlin) ( email )

Straße des 17. Juni 135
Berlin, 10623
Germany

Manfred Königstein

University of Erfurt ( email )

Internationales Buro
Nordhaeuser Str. 63
D - 99089 Erfurt
Germany

Martin Strobel

Maastricht University - Department of Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31 (0)43 38-83646 (Phone)
+31 (0)43 38-84878 (Fax)

HOME PAGE: http://Martin.Strobel.infonomics.nl

Maastricht University - International Institute of Infonomics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31 (0)43 38-83885 (Phone)
+31 (0)43 38-84905 (Fax)

HOME PAGE: http://Martin.Strobel.infonomics.nl

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